Crude oil fell after the government reported an unexpected increase in US supplies and the highest rate of refinery operation in almost three years.
Inventories climbed 360,000 barrels to 353.5 million in the week ended July 16, an Energy Department report showed. Stockpiles of gasoline and distillate fuel, a category that includes heating oil and diesel, also increased. Crude oil imports increased 7.5 per cent to 9.98 million barrels a day, the biggest one-week gain since April.
"The first thought that came to mind was that this report is bearish, bearish, bearish," said Hamza Khan, an analyst with Schork Group Inc, a consulting company in Villanova, Pennsylvania. "There were inventory gains in each of the three major categories."
Crude oil for September delivery fell $US1, or 1.3 per cent, to $US76.58 a barrel at the close of floor trading on the New York Mercantile Exchange. Futures reached $US78.57, the highest level since June 28.
The price was $US76.95 half an hour before the close, before Federal Reserve Chairman Ben S. Bernanke said the economic outlook remains "unusually uncertain" even as the central bank prepares to eventually raise interest rates.
The Fed's "somewhat weaker outlook" is due in part to financial markets that "have become less supportive of economic growth in recent months," Bernanke said today in testimony to the Senate Banking Committee.
The Standard & Poor's 500 Index slipped 1.1 percent to 1071.66 at 2.33pm New York time.